Correlation Between Nestle Bhd and CB Industrial
Can any of the company-specific risk be diversified away by investing in both Nestle Bhd and CB Industrial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nestle Bhd and CB Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle Bhd and CB Industrial Product, you can compare the effects of market volatilities on Nestle Bhd and CB Industrial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nestle Bhd with a short position of CB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle Bhd and CB Industrial.
Diversification Opportunities for Nestle Bhd and CB Industrial
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nestle and 7076 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nestle Bhd and CB Industrial Product in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Industrial Product and Nestle Bhd is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nestle Bhd are associated (or correlated) with CB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Industrial Product has no effect on the direction of Nestle Bhd i.e., Nestle Bhd and CB Industrial go up and down completely randomly.
Pair Corralation between Nestle Bhd and CB Industrial
Assuming the 90 days trading horizon Nestle Bhd is expected to under-perform the CB Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Nestle Bhd is 1.33 times less risky than CB Industrial. The stock trades about -0.38 of its potential returns per unit of risk. The CB Industrial Product is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 128.00 in CB Industrial Product on August 28, 2024 and sell it today you would earn a total of 6.00 from holding CB Industrial Product or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestle Bhd vs. CB Industrial Product
Performance |
| Timeline |
| Nestle Bhd |
| CB Industrial Product |
Nestle Bhd and CB Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle Bhd and CB Industrial
The main advantage of trading using opposite Nestle Bhd and CB Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle Bhd position performs unexpectedly, CB Industrial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CB Industrial will offset losses from the drop in CB Industrial's long position.| Nestle Bhd vs. CSC Steel Holdings | Nestle Bhd vs. Senheng New Retail | Nestle Bhd vs. Diversified Gateway Solutions | Nestle Bhd vs. PIE Industrial Bhd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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